This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Next Retail M&A: Look to Lifestyle Brands

Editor's note: As part of our partnership with PBS's Nightly Business Report, TheStreet's Jeanine Poggi joined NBR Tuesday (watch video and read transcript here) to discuss the recent merger activity in retail -- and which companies could be next.

NEW YORK ( TheStreet) -- VF Corp.'s (VFC - Get Report) $2.2 billion acquisition of Timberland (TBL) revealed a new trend emerging in retail mergers and acquisitions: the interest in retail brands rather than retail stores.

"By purchasing a brand, an acquirer is able to carefully expand the distribution platform instead of entering into economically bad leases, gain instant space and relationships at wholesale and create lifestyle product platforms," says Wall Street Strategies analyst Brian Sozzi.

The buyout of Volcom (VLCM) by private-equity firm PPR for $607.5 million in April is another example of this trend.

The retail landscape has been ripe for buyouts, both strategic in nature and from private equity. Deals were kick-started at the end of 2010 with the acquisitions of J.Crew, Gymboree and Jo-Ann Stores.

Word on the Street

Wall Street has been aflutter over rumors of other possible buyouts, with investors hoping to get in on any deal before an offer ultimately sends the stock on a tear.

There have been many retail casualties in recent weeks as the risk of inflation and softer consumer spending have emerged, creating attractive entry points for bidders.

But there's also a lot of noise out there, and not all retailers with stocks in the doldrums have a deal waiting on the sidelines.

Some qualities that make a retailer attractive to prospective bidders include the potential for the company to regain its dominance under new management, its viability in international markets, any hidden gems that could become catalysts for the stock and its strength as a lifestyle brand, Sozzi noted.

Sozzi called out five retailers that fit these criteria: Urban Outfitters (URBN), Coach (COH - Get Report), Tiffany (TIF - Get Report), Under Armour (UA - Get Report) and Polo Ralph Lauren (RL - Get Report).

Tiffany and Ralph Lauren, in particular, were in the spotlight last week, after rumors surfaced that two private-equity firms may be interested in the luxury retailers.

Cartier owner Richemont may be looking to expand its jewelry business with Tiffany. Tiffany has been working to expand its watch business through a joint venture with Swatch, so partnering with Cartier, which is famous for its time pieces, may not be that far-fetched.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
TLB $0.00 0.00%
COH $42.11 0.38%
GPS $41.43 -1.43%
RL $134.29 -0.48%
UA $75.79 0.37%

Markets

DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs